Analysis: Europe — 04 November 2026
US envoys float restoring Russian gas to Europe as Ukraine peace lever
The Wall Street Journal reports that US envoys Jared Kushner and Steve Witkoff discussed a resumption of Nord Stream gas sales with Kirill Dmitriev, an economic adviser to Vladimir Putin. The reported scheme would route Russian gas through American intermediaries to work around EU sanctions, and would give US investors a commercial stake. Wolfgang Münchau, writing in UnHerd on 3 November, treats this as the Trump administration’s main diplomatic idea for ending the war. Fact: the EU has already legislated a phase-out of Russian gas imports by next year. Münchau’s analysis is that the deadline is not realistic, and that Washington expects European resistance to be “less rigid than meets the eye.”
Background is the reversal of earlier US policy. The first Trump administration and Congress sanctioned Nord Stream operators to punish German dependence on Russian pipeline gas. A Ukrainian commando is now on trial over the pipeline’s destruction. Europe’s winter stocks are low, governments face the fiscal cost of the war, and public support for further aid is falling. In Germany, total support for Ukraine has reached €100 billion; a Bertelsmann poll shows backing for Ukrainian EU membership down from 61% in March 2022 to 41%. The Alternative for Germany is preparing talks in Abu Dhabi next year with US and Russian representatives on Nord Stream and economic cooperation, ahead of important state elections in April 2027.
The open questions are political, not technical. The front is largely frozen: Russia has not taken Kramatorsk and Sloviansk, and a Ukrainian counter-push looks weak. Brussels still cannot tap frozen Russian assets in Belgium, and appetite for another EU loan to Kyiv is low. A policy U-turn is not imminent. The tension is between a legal phase-out, energy and budget pressure, US commercial interest, and German electoral timing.
Sources: UnHerd.
ECB’s Nagel says a December rate hike is very likely
On 3 November, Bundesbank president Joachim Nagel said a European Central Bank rate increase in December is “very likely to be necessary.” He argued that inflation pressures are running above September expectations and that the euro area is approaching the ECB’s adverse scenario. His stated priority is to stop an energy-price spike feeding into broader prices. InvestingLive reported the remarks as a clear hawkish signal; the unresolved market question is how much of the Governing Council shares it.
The backdrop is uneven growth and hotter energy costs. Eurozone Q3 GDP beat forecasts at 0.4% quarter-on-quarter, but Germany grew only 0.2%, Italy stagnated and France contracted 0.1%. Headline inflation is expected near 4% in the November flash estimate, with core seen holding around 2.5%. Swiss CPI rose 0.2% month-on-month against a flat forecast. European equities closed lower on 3 November as bond yields climbed; the UK FTSE led the declines. UK 10-year gilt auction yield was 5.27%.
The contradiction for the ECB is familiar: growth is patchy while energy is pushing inflation back up. Nagel frames a December hike as prevention of second-round effects. Traders must still judge whether that view commands a majority, and whether higher policy rates collide with weak household spending in Germany and fiscal strain across the large euro-area states. Energy diplomacy over Russian gas, if it advanced, would cut the same inflation channel Nagel wants to contain with rates.
Sources: InvestingLive.